As Congress prepares for a vital debate over debt, deficits, and government spending, there is reason to be concerned that the GOP is engaging in a bit of unilateral disarmament.
Over the weekend, several Republican spokesmen, including House majority leader Eric Cantor and House Budget Committee chairman Paul Ryan, indicated that they would, in fact, support increasing the nation’s $14.3 trillion debt limit when it comes up for a vote in March. Of course, they also said that they would use the vote as “leverage” to demand spending cuts. But how much leverage is there likely to be if they have already conceded the final vote? After all, a threat only works if the other side believes that you will act on it.
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Of course the Obama administration is already warning of Armageddon if Congress doesn’t raise the debt ceiling. Certainly it would be a shock to the economic system. The bond market could crash. The impact would be felt at home and abroad.
But would it necessarily be worse than the alternative?
While Congress has never before refused to raise the debt ceiling, it has in fact frequently taken its time about doing so. In 1985, for example, Congress waited nearly three months after the debt limit was reached before it authorized a permanent increase. In 1995, four and a half months passed between the time that the government hit its statutory limit and the time Congress acted. And in 2002, Congress delayed raising the debt ceiling for three months. It took three months to raise the debt limit back in 1985 as well. In none of those cases did the world end.
More important, what will be the consequences if the U.S. government fails to reduce government spending? What happens if we raise the debt ceiling then continue merrily on our way spending more and running up ever more debt?
Already Moody’s and Standard & Poor’s have warned that our credit rating might be reduced unless we get a handle on our national debt. We’ve heard a lot recently about the European debt crisis, but, as one senior Chinese banking official recently noted, in some ways the U.S. financial position is more perilous than Europe’s. “We should be clear in our minds that the fiscal situation in the United States is much worse than in Europe,” he recently told reporters. “In one or two years, when the European debt situation stabilizes, [the] attention of financial markets will definitely shift to the United States. At that time, U.S. Treasury bonds and the dollar will experience considerable declines.”
Moreover, unless we do something, federal spending is on course to consume 43 percent of GDP by the middle of the century. Throw in state and local spending, and government at all levels will take 60 cents out of every dollar produced in this country. Our economy will not long survive government spending at those levels.
One could argue that the damage has already begun. The markets don't wait until an event occurs to react, by then the real money has been made and lost.
Moody's and S&P's warning has started the wheels turning.
As far as defaulting and bankruptcy, I believe I've made it clear in earlier writings that I'm all for it. It is the equalizer. It evens all things. It eliminates programs that are burying us, and allows for a restructuring in a fiscally responsible manner.
This point in history and these political circumstances have aligned to present an opportunity for one vote to begin the process of re-establishing our sovereignty and independence as a Nation and as Americans.
Could you make any increase in the debt ceiling with the requirement that spending be reduced by the same amount or maybe by half? I understand that doing the one contradicts the other, but is it a way to make the cuts happen? Wouldn't the fact that spending had to be cut, precipitate the future need to increase the debt limit. Also, any non-security agency and personnel created in the last 10 years should be eliminated. I can't believe we need anymore feds in anything but the military/security than we had in 2000. God bless America.
Like I always try to tell people, the United States is the only country on the face of the planet with a $14 trillion debt. If you consider all of the unfunded liabilities of the country, that figure shoots up to anywhere from a low (heh) $60 trillion to a high of $130 trillion. Even if we took the smaller number, if the world bailed us out it would send reverberations throughout. To paraphrase an old saying, all good things must come to an end.
Walter Russell Mead made a good comment on this idea of consuming our way to prosperity:
"The blue social model, for all its merits, separates production and consumption in ways that are ultimately dehumanizing and demeaning for large chunks of the population. The true value of human life does not come from consumption, even lots of consumption. It comes from producing goods and services of value through the integration of technique with a vision of social and personal meaning. Being fully human is about doing good work that means something."
We better discover real quick that in order to consume we must produce first because relying solely on consumption to grow our economy is what has gotten us in this mess.
It is a real shame and a sign of the times when men and women of consenting age are unable to grasp the FACT that our Republic and our way of life are UNSUSTAINABLE with a 14 TRILLION National Deficit accruing interest @ the rate $324,000,000 per minute.
Get out your calculator and figure 324,000,000 per minute x 24 x 7 x 365. The answer is THERE IS NO MONEY!
Goverment agencies made it "legal" for money men in and out of government to "make money" without producing anything worth the money they made. The only way this economy of ours can work is for people to be engaged in employment that is productive. Government workers do not produce anything and yet government workers are the most numerous and best paid of all the employees in the U.S.A. This present balance of employment versus production is utterly, completely and absolutely unsustainable.
Do the math. The numbers don't lie. Little tics of light on a computer screen are not real money. The value of money is worth something only when you work for it and produce something of value for the money you are paid. Millions of pages of Government rules and regulations are worthless. What does that say about the bureaucrats and Administrative Law Judges that produce them?
The only documents in Washington D.C. that are actually worth more than the paper they are written on are the Declaration of Independence and The Constitution.
Whole bureaucracies need to be shut down; employees summarily dismissed & sent home with stipend unemployment benefits. It will be an uncomfortable jolt for about 30 days until people get used to the FACT that Big Government is over because there is no money to pay for it.
Sorry, Tanner, but you're backing the wrong guys and the wrong ideology.
Boehner and Co. are going to fold. It's what he and the GOP does. Conservatism has a history of folding. Hayek called it 'enabling'.
Hayek was correct.
The need for more election cycles with an angry populace that will be paying higher taxes is the only forumula that will fix this mess we find ourselves. Not ideology; not common sense; not some screaming talk-radio host, and not some pie-in-the-sky sense that we are just better than the socialists is enough to do it.
I hope Cantor and Ryan read this article. Neither of them is my Congressman, unfortunately. I am okay with belt-tightening if I see it as a way to make the situation better, but I see any raising of the debt ceiling as making things worse. Why don't we have a law dictating a process for government shutdown, so pols can't threaten us with not getting Social Security checks or whatever? Seems like the first things to cut are non-essential services and programs -- EPA, Education, FCC. There are plenty of local laws about the environment, the local schools won't close if the Dept of Ed is on furlough, nor even if the subsidies are cut, and the FCC is more of a pain than a help. Throw in the Dept of Energy and HHS (okay, not entirely sure what they do other than control health care delivery). If I want to live within a budget, I don't start by refusing to pay rent and utilities or giving up food, I start with luxuries and optional things. I put off or cancel vacations, for instance. I hope the Republicans don't allow the debt ceiling to be raised at all. I am not optimistic.
Yes. The surest way to a "non-optimum" deal is always to negotiate with yourself, before you begin negotiating with the other side.
---------"Of course the Obama administration is already warning of Armageddon if Congress doesn’t raise the debt ceiling."----
This is, of course, just a negotiating tactic. It's purpose is to get the Republicans to negotiate with themselves, so that instead of presenting their first, optimum, position to the Democrats and Obama, they present their 19th position, having negotiated themselves well down from what they want to get and could get.
Having had Obama and the Democrats warn of The End Of Civilization As We Know It if the debt ceiling is not raised before it is nominally reached, THE REPUBLICANS HAVE A DUTY NOT TO RAISE IT BY THAT TIME.
That forces the Administration to do its own spending control and cutting to avoid default.
That shows the Administration prematurely crying fire, and makes it look foolish.
Don't these guys know anything about negotiations and negotiating strategy and tactics? Surrender at the first shot is not negotiating.
I know it will never happen, but I'd love to see House Republicans attach the two-page repeal of health care to the extension of the debt ceiling and dare the president to veto it!
I'm not sure blocking the ceiling is the way to go. I'm not afraid of my ass being gored and, in fact, am somewhat enamored of Rep. Ryan's plan. That would go a long way to solving the health imbroglio. It's bound to hurt but it's apparent hurt will be necessary.
I'm not in favor of cutting Social Security; with modifications SS is self perpetuating. I am a recipient veterans' benefits and would be well willing to pay for a sizable share of those.
From these comments it's apparent that some don't grasp the problem. The discretionary part of the budget is 1.4T; mandatory spending 2.2T. Laws must be passed to change mandatory spending.
It,s fashionable to blame President Obama for the debt but the Constitution(my liberal roots are showing)clearly states that spending bills will originate in the House.
I don't grasp the problem? I think the problem is that .8 trillion was spent on some so called stimulus that didn't manage to fill 1 pothole in Ventura County. And would .. not raiding the fund .. be part of your social security trust fund modifications?
Government will continue on the endless spending spree as long as taxpayers are willing to foot the bill. What I imply by "willing" is electing or re-electing politicians that are unable or unwilling to do the right thing, which is balancing every budget and cutting out waste and pet projects for their constituents. It is up to the voters to choose who goes to DC to do the job. If we continue to vote via afilliation we will continue down this same path. The only hope we have now is grass roots organizations like the demonized tea party that seem to have had enough of the same 'ol song and dance. We need more of this not less. We can't blame congress. We can only blame ourselves.
GOP better put out a plan that includes some real entitlement cuts and restraint, and major discretionary cuts, to offer in exchange for raising the debt limit. Something that makes real progress, with promise of more to come later, but not going far enough right away for our President to claim the GOP is using the debt limit to try to force through a one-party agenda (as Democrats did in the last Congress.)
The American people crack me up. I just read the Reuters poll Tanner cites and here's the recap.
Should we raise the debt ceiling? NO!
Where should we cut?
Education: NO!
Social Security: NO!
Medicare: NO!
Raise taxes: NO!
The only thing we actually want to scale back is foreign aid, which has no direct affect on my pocket book, and there were a bunch of 50/50 answers to areas where the savings would be miniscule, like SEC, EPA, national parks, etc. Amazingly, though, 51% support cutting defense.
We will continue to have terrible problems as long as the American people prefer to remain ignorant of reality.
Oh and there's no way they won't go ahead and raise the debt ceiling.
The Republican plan is to confront the Democrats with a choice between defaulting on bonds that are mostly owned by foreign governments and banks; or on our Social Security and Medicare commitments to our own people?
Republican leadership response to the debt ceiling issue is disheartening to say the least. First rule of negotiation and poker for that matter is to argue your point from a position of strength real or perceived.
By announcing that the Ceiling must by raised negated their argument before it even began. Much like announcing troop pull outs on a specific date.
Can anyone explain to me how raising the debt ceiling is any different than increasing the credit limit on a maxed out credit card held by by an unemployed, alcoholic with borderline schizophrenia? The Bank would be insane to do so.
The obvious answer is that the federal government can print money. Nearly as insane but that is what we are doing.
To say that failure to increase the debt ceiling would lead to an economic catastrophe just doesn't cut it anymore. It's like the drunk pleading with the bartender saying...
"just one more drink and I promise I'll go out and get a job tomorrow and pay off my tab." Anyone who believes that is a fool or worse.
